Millions face shrinking Social Security payments
(AP Photo/Alex Brandon)
President Barack Obama talks about the the Afghan elections, Friday, Aug. 21, 2009, outside the White House in Washington, prior to boarding Marine One and departing for the presidential retreat at Camp David, Md.
Published: August 23, 2009
WASHINGTON (AP) — Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.
The trustees who oversee Social Security are projecting there won’t be a cost of living adjustment (COLA) for the next two years. That hasn’t happened since automatic increases were adopted in 1975.
By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.
“I will promise you, they count on that COLA,“ said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. “To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal.“
Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels.
Advocates say older people still face higher prices because they spend a disproportionate amount of their income on health care, where costs rise faster than inflation. Many also have suffered from declining home values and shrinking stock portfolios just as they are relying on those assets for income.
“For many elderly, they don’t feel that inflation is low because their expenses are still going up,“ said David Certner, legislative policy director for AARP. “Anyone who has savings and investments has seen some serious losses.“
About 50 million retired and disabled Americans receive Social Security benefits. The average monthly benefit for retirees is $1,153 this year. All beneficiaries received a 5.8 percent increase in January, the largest since 1982.
More than 32 million people are in the Medicare prescription drug program. Average monthly premiums are set to go from $28 this year to $30 next year, though they vary by plan. About 6 million people in the program have premiums deducted from their monthly Social Security payments, according to the Social Security Administration.
Millions of people with Medicare Part B coverage for doctors’ visits also have their premiums deducted from Social Security payments. Part B premiums are expected to rise as well. But under the law, the increase cannot be larger than the increase in Social Security benefits for most recipients.
There is no such hold-harmless provision for drug premiums.
Kennelly’s group wants Congress to increase Social Security benefits next year, even though the formula doesn’t call for it. She would like to see either a 1 percent increase in monthly payments or a one-time payment of $150.
The cost of a one-time payment, a little less than $8 billion, could be covered by increasing the amount of income subjected to Social Security taxes, Kennelly said. Workers only pay Social Security taxes on the first $106,800 of income, a limit that rises each year with the average national wage.
But the limit only increases if monthly benefits increase.
Critics argue that Social Security recipients shouldn’t get an increase when inflation is negative. They note that recipients got a big increase in January — after energy prices had started to fall. They also note that Social Security recipients received one-time $250 payments in the spring as part of the government’s economic stimulus package.
“Seniors may perceive that they are being hurt because there is no COLA, but they are in fact not getting hurt,“ said Andrew G. Biggs, a resident scholar at the American Enterprise Institute, a Washington think tank. “Congress has to be able to tell people they are not getting everything they want.“
Social Security is also facing long-term financial problems. The retirement program is projected to start paying out more money than it receives in 2016. Without changes, the retirement fund will be depleted in 2037, according to the Social Security trustees’ annual report this year.
President Barack Obama has said he would like tackle Social Security next year, after Congress finishes work on health care, climate change and new financial regulations.
Lawmakers are preoccupied by health care, making it difficult to address other tough issues. Advocates for older people hope their efforts will get a boost in October, when the Social Security Administration officially announces that there will not be an increase in benefits next year.
“I think a lot of seniors do not know what’s coming down the pike, and I believe that when they hear that, they’re going to be upset,“ said Sen. Bernie Sanders, an independent from Vermont who is working on a proposal for one-time payments for Social Security recipients.
“It is my view that seniors are going to need help this year, and it would not be acceptable for Congress to simply turn its back,“ he said.
___
On the Net:
Social Security Administration: http://www.ssa.gov/
National Committee to Preserve Social Security and Medicare: http://www.ncpssm.org
Copyright 2009 The Associated Press.
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Reader Reactions
So, chicago1, where were you when the buffoon Bush did all of this borrowing from the money that we had saved for Social Security? Where were you when the buffon Bush ran the governments budget so out of kilter that the only recourse was to keep borrowing to pay the country’s bills? You people who didn’t vote for Obama need to get over it. He doesn’t want or need any of the things he is trying to implement to reverse that idiotic policies that led the country down the road it’s on. What would you have done? Let everything that was going bad go bad? What’s the brilliance in that? If your house needs a roof, are you going to just let it go because it’s bad? Or would you do all you could to get it repaired? Come on people! He’s the President now. You can’t change that until 2012. If the country’s economy bankrupts, it is not a benefit to any body. I don’t care what you have stashed in the mattress.
But SteveGudac, while assuming that everyone else is ignorant, doesn’t understand the simple mathematics of addition/subtraction. The “voluntary” drug plan that he’s talking about, is not voluntary when you have to have meds monthly. At the cost of prescription, and even some OTC medications, the “voluntary” supplemental insurance coverage, for Social Security recipients, is an absolute necessity. And regardless of the conservative spin, the amount paid in as compared to the amount received, the bottom line is still a reduction in the value of our social security checks. I am convinced that not getting the COLA will adversely impact millions of people who are FORCED to live on this subsistence. Some of us, myself included, were forced to end our place on the employment roles because of disability. And I resent the implication that we are speaking out of “ignorance and personal nastiness” because we are facing even more adversity due to life changing events out of our control or making. I would much rather be working and buying my own coverages. But I can’t. And, neither can millions of other “citizens”.
Huh. Isn’t that interesting. But yet there’s trillions of dollars allocated for propping up corrupt corporations, greedy banks, welfare ward mortgages (and soon to come car notes)...... but we can’t seem to find the money for the seniors. Imagine that.
The money was there, at one time. It was YOUR money, from YOUR tax dollars….but Congress (greedy government) just kept on borrowing from it, raiding it every time they wanted a little “extra”....and now there is no money there, and soon enough, it will be gone all together. All the money you pay currently, I pay, etc. we’ll never see a penny of it.
Hope you’ve saved what you could in your mattress. You’re gonna need, especially when the buffoon Obama gets done throwing money at all of his wants and needs.
Typical liberal: read my comment again. “Medicare” is one thing; it will not go up. “Prescription drug plan” payment is another, and relatively new, thing. It is voluntary. It will go up $2 a month. You are not required to sign up for this. Your SS check will not go down unless you have VOLUNTARILY signed up to have the government subsidize your drugs and deduct the insignificant “premium” from your SS payment. In any case, your SS payment is not going down, only the net check you get after having a voluntary contribution deducted from it. No matter what, why is $2 a month a big deal? And, yes, I do receive SS. And, like almost all SS recipients, if I live until I’m 70, I will have gotten more from SS than I paid in, even figuring interest at 5% on the money I paid in over the years I paid it in. There is a table on the Internet that you can use to figure this out. Find it yourself. I am done with this article because I can only deal with a minimal amount of ignorance and personal nastiness, which seem to be hallmarks of modern American liberalism.l
Hmmm, let’s see. If my check is $1000.00 and my Medicare is $96.00, and it goes up, say $10.00 next year, the I will get $10.00 less in my check, right? If that’s so, where is the liberal misinformation? My check will shrink by $10.00. SteveGudac, you must not be a recipient.
This is just another example of AP using a false headline and making a minor matter into a misleading story. Nobody is going to be getting “shrinking” Social Security checks. They will be the same. The fact that the premium recipients pay for drug costs (a voluntary program) is going up slightly does not mean social Security payments are going down. This is an easy story to present properly. AP just doesn’t like to do that. It always prefers to put a liberal spin on such issues.
It is not possible to insulate everybody from normal economics but people in the West (U.S. and Europe) have been trained to believe that the government can do this, much to the detriment of common sense.
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